US open: Stocks shake off 'shocking' April non-farm payrolls

Investors on Wall Street have shaken off the surprise shortfall in US jobs in April and are again pushing stocks higher.

While not wholly unexpected, the 266,000 increase reported by the Department of Labor market the sharpest shortfall relative to economists' forecasts, of 950,000 in this case, ever.

"Time for a deep breath. One month’s data prove nothing; payrolls could rebound massively in May," Ian Shepherdson, chief US economist at Pantheon Macroeconomics mused out loud.

Against that backdrop, as of 1519 BST, the Dow Jones Industrial was up 0.47% to 34,708.6, alongside a 0.79% gain on the S&P 500 to 4,235.37, while the Nasdaq Composite was putting on 1.4% to 13,825.22.

In parallel, the yield on the 10-year US Treasury note was off by four basis points to 1.53% and the spot US dollar index was down 0.57% at 90.44.

According to Shepherdson, economists including himself failed to properly take into account Homebase data which had been warning of a slowdown in job growth last month.

Notably, Shepherdson said historical evidence did not support the belief that unemployment benefits were keeping Americans back from searching for jobs and while fear of Covid-19 could be a factor, that would fade over time.

April's job report came as an increasing number of economists were questioning the wisdom of the Federal Reserve continuing to put off the debate on whether to 'taper' its bond purchases until it feels the US labour market is in a strong enough position and inflation heats up.

Overnight, the Fed itself had cautioned in its semi-annual stability report that: "With investors ebullient on expectations for a strong rebound, it is important to closely monitor risks to the system and ensure the financial system is resilient."

In the background meanwhile, the head of India's opposition Congress party called on the country's Prime Minister to order another nation-wide lockdown to contain the latest wave of Covid-19.

The day before, the boss of US biotechnology firm Moderna, Stephane Bancel, said the company was anticipating new variants of Covid-19 would emerge in coming months as the southern hemisphere entered its autumn and winter seasons.

Dow Jones - Risers

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